Eun Young Park, Zac Sharpe, Sanghoon Han and Hyunyang Ko | Global Arbitration Review
Introduction
Construction contracts are normally detailed documents with voluminous appendices that are finalised after several rounds of internal review, clarification and careful consideration. The working assumption of the procurement and marketing teams involved in contract negotiations is that the agreement between the parties will be given effect.
In most instances, courts and arbitral tribunals strive to give effect to the parties’ agreement, recognising party autonomy and pacta sunt servanda principles; however, party autonomy is not absolute. Mandatory laws applicable to construction projects take many forms and may override the parties’ agreement in certain instances. Mandatory laws may modify, invalidate or render unenforceable certain aspects of the parties’ agreement. The governing law applicable to the contract also supplements the parties’ agreement, providing extra-contractual remedies and addressing important lacunae in the parties’ agreement.
In most instances, the parties invoke mandatory laws or extra-contractual remedies where the contract is silent or does not provide a suitable remedy. The impact of these issues can be significant. Mandatory law may invalidate aspects of the parties’ agreement or make the entire agreement void or voidable. In other cases, mandatory laws may substantially limit the recovery of one of the parties or completely override the contractual risk allocation.
This chapter focuses on mandatory law and non-contractual claims that arise frequently in major construction disputes. The application of mandatory laws and the availability of extra-contractual remedies in international construction projects frequently require, as a threshold matter, a conflict of law analysis. The relevant test and outcome of that analysis depend on the choice of law rules of the forum and frequently require weighing competing policies and navigating ambiguities in the application of different laws. Adding a degree of uncertainty, the rules of many arbitral institutions provide tribunals with the power to apply the rules the tribunal determines to be appropriate. Consequently, the application of mandatory laws and the availability of extra contractual remedies typically require careful analysis of the laws at issue and their application to the contractual relationship.
Precontractual statements and representations
In the context of a major project tender, there may be several rounds of technical discussions and extensive commercial negotiations between the parties. The precontract discussions may involve several teams covering legal, engineering, procurement, project management, construction, commissioning, and pricing and estimation. The extent of these discussions and the involvement of multiple contact points and communication channels increases the risk of miscommunication and misunderstanding, which can lead to disputes.
Entire agreement and non-reliance clauses are standard in construction contracts and typically confirm that the parties’ entire agreement is reflected in the written contract and that the parties are not relying, and have not relied, on any representations when entering into the agreement. Even a comprehensively drafted non-reliance clause confirming that the parties have conducted their own independent investigations may not prevent a claim for misrepresentation or negligent misstatement. The effectiveness of such provisions may be undermined if, in fact, one party entered into the contract based on misrepresentations. Consequently, mandatory laws in many jurisdictions limit the effectiveness of such clauses.[1] It is also a general principle of law that parties cannot limit their liability for fraud.[2]
Misrepresentation involves a false statement of fact, which induces the other party to enter into a contract. Misrepresentations can be made innocently, negligently, fraudulently (i.e., knowingly, without believing they are true) or recklessly as to whether they are true or false. As fraudulent misrepresentation vitiates the consent of the parties, the standard remedy is rescission of the contract and reliance damages. In practice, contractual limitations of liability seldom purport to limit liability for fraudulent misrepresentation and commonly include a carve-out for fraud; attempting to limit liability for fraud violates public policy against a party benefiting from its own deceit and may result in the limitation of liability being declared void and unenforceable.
Negligent misrepresentation occurs when a party makes a false statement without reasonable care and a duty to such care exists, generally because of a special relationship between the parties. In the construction industry, a duty of care may arise from certain professional relationships (e.g., with architects and engineers). Even if no special relationship exists, relief in the form of rescission or damages may be available if representations were made without reasonable grounds. Further, mandatory law may prevent parties from limiting their liabilities for negligent misrepresentation in some cases.[3]
Misrepresentation claims between sophisticated commercial parties are not straightforward, particularly where the parties have disclaimed reliance on pre-contract statements. Pleading rules in some jurisdictions also discourage claims for fraud by imposing a heightened burden on claimants.
However, misrepresentation provides an exceptional and unique remedy: the right to rescind an unfavourable agreement. For this reason, misrepresentation is alleged with some frequency in major construction disputes, particularly where a party (typically the contractor) has entered into a contract on unfavourable terms.
Misrepresentation claims are fact-specific and can vary considerably. Claims against the owner may focus on the accuracy of information and studies provided by the owner or the owner’s other contractors, statements relating to the suitability or availability of materials or utilities, the suitability of assumed or prescribed means and methods, local laws and regulations applicable to the project (including the status of regulatory approvals), site safety, site access and other site conditions.
Legislative enactments may also provide sui generis remedies for precontract statements and representations. The Australian Consumer Law (ACL), for instance, comes up frequently in large-scale mining, construction and infrastructure disputes in Australia and provides expansive relief, including the right to claim damages for misleading and deceptive conduct. Section 18 of the ACL provides a broad statutory prohibition against ‘misleading and deceptive conduct’, which encompasses a wide variety of conduct (including representations) that have the effect of leading a person into error. Misleading and deceptive conduct differs from misrepresentation under the common law in its focus on the effect of the conduct rather than the intention of the party whose conduct is impugned.[4] It is also more expansive, making actionable statements on future matters (e.g., performance projections and timelines[5]) and silence.[6]
Like fraudulent misrepresentation, the ACL’s prohibition against misleading and deceptive conduct is mandatory law and overrides contrary agreement between the parties. Even time limits on claims may be unenforceable in certain cases if they exclude liability for misleading and deceptive conduct. For instance, in Brighton v Multiplex Constructions, a subcontractor sought damages against the contractor, alleging that the contractor had breached Section 18 of the ACL by making misleading representations regarding the construction project scheduling and timelines. The Victorian Supreme Court held that the seven-day time limit in the contract for bringing claims was void for illegality because it excluded liability under Section 18 of the ACL;[7] however, other Australian courts have found that temporal limitations on claims which are procedural in nature and do not oust the operation of the ACL are permissible.
Exclusion clauses and indemnities
Exclusion clauses are contractual provisions that limit or exclude a party’s liability for certain breaches or damages arising under the contract. These clauses help manage uncertainty and limit liability for delays, defects, unforeseen site conditions or third-party risks in construction projects. Because of mandatory laws that prevent parties from limiting their liability for intentional misconduct, parties will typically include express carve-outs for wilful or intentional misconduct. Best practice is to define these terms carefully and identify precisely the classes of persons whose conduct is relevant for purposes of the carve-out. Commercial parties wanting to ensure the limitations of liability apply broadly, for instance, will specify that the carve-out is limited to wilful misconduct of senior management and key personnel of the parties, excluding other personnel and their other contractors, partners and vendors.
Some civil law jurisdictions include prohibitions against limitations of liability for recklessness or gross negligence in addition to wilful misconduct.[8] Where applicable, best practice is for parties to include a carve-out for gross negligence and define the term to ensure the scope of the carve-out and the liability limitations are clear and consistent with applicable laws. It is also important to define ‘gross negligence’ if the contract is governed by the law of a jurisdiction where gross negligence is not well-established to ensure the carve-out operates in a predicable manner and as intended by the parties.
Mandatory laws may also limit the ability of parties to exclude their liability for simple negligence. For instance, in the United Kingdom, Section 2(1) of the Unfair Contract Terms Act 1977 (UCTA) provides that ‘a person cannot by reference to any contract term . . . exclude or restrict his liability for death or personal injury resulting from negligence’. Section 2(2) provides that a person can only limit their liability for other loss or damage (i.e., other than death or personal injury) arising from negligence if the clause satisfies the requirement for reasonableness in Section 11 of the UCTA. In addition, under Section 11(5) of the UCTA, it is for the party claiming that a contract term satisfies the requirement of reasonableness to show that it does.
Exclusion clauses are not the only area of concern when it comes to mandatory law. Most construction contracts also include detailed risk allocation provisions in the form of knock-for-knock indemnities that purport to allocate responsibility for loss of or damage to property, personal injury and death. Depending on the circumstances, the parties may also negotiate indemnities for third-party liabilities, environmental liabilities and other matters. These provisions are typically negotiated carefully and backed by insurance obligations applicable to both parties. If not drafted with appropriate carve-outs, these indemnities may operate as liability exclusions and run afoul of mandatory laws, resulting in a significant and uninsured liability.
Indemnities that shift liability for negligence can be particularly problematic. Under English law, clear language was traditionally required to shift responsibility for negligence to another party. Although the English courts have softened their approach (particularly in the context of a mutual clause such as a knock-for-knock indemnity), best practice is to refer expressly to negligence in the indemnity.
Some jurisdictions may not permit a party to shift responsibility for its own negligence at all. In Korea, for instance, the courts generally do not allow enforcement of indemnity clauses that purport to indemnify a party for its own negligence, even in cases not involving death or personal injury and where the indemnity is clearly drafted for that purpose. For example, the Korean Supreme Court refused to enforce an indemnity clause requiring a contractor to indemnify the owner against third-party claims arising from the owner’s own negligence.[9] The Korean courts generally consider such clauses to be contrary to public policy and, therefore, unenforceable.
While best practice is to ensure that liability provisions operate in a manner consistent with applicable laws, an overly broad exclusion or indemnity may not result in the clause being struck down in its entirety. In some cases, it may be possible under applicable law to excise the offending part of the clause and give effect to the remainder. In other cases, ordinary rules of interpretation may support a narrower reading of the clause to avoid creating a conflict with mandatory laws that result in the clause being struck down in its entirety.
Defect liability clauses
Defect liability clauses also give rise to various issues in international construction projects. In addition to mandatory laws that apply in cases of gross negligence or negligence, some jurisdictions have specific laws that restrict the ability of contractors to shift or exclude liability for certain types of defects. For instance, in Korea, a contractor cannot exempt its liability for defects that it knew about but failed to disclose when handing over the completed work.[10]
Courts in common law jurisdictions have similarly clarified the limited scope of such clauses. In Pearce & High Ltd v. Baxter, the English Court of Appeal clarified that a defects liability clause does not, in the absence of clear and express language, exclude an employer’s common law right to claim damages for defects that emerge during the liability period. According to the English Court of Appeal, such clause merely provides a contractual mechanism for remediation, and failure to notify within the stipulated period does not bar the right to damages as long as the defects became apparent within the liability period and were brought to attention within a reasonable time.[11]
Similarly, in Sandy Island v. Thio Keng Thay, the Singapore Court of Appeal held that a defects liability clause is not a complete code and does not displace an employer’s right to claim common law damages for defects, unless the contract clearly provides otherwise. Even where the employer refuses to provide access to the contractor for rectification without good reason, this does not extinguish the damages claim but may affect the quantum recoverable owing to the duty to mitigate.[12]
Some jurisdictions also provide an extended period for owners to notify contractors of latent defects in the works or restrict temporal limitations on defect claims unless they are reasonable. For contractors, it is important to ensure that it has recourse against subcontractors and vendors for any liabilities in relation to the owner for defects that cannot be excluded under mandatory laws.
Several civil law jurisdictions, including several countries in the Middle East and North Africa, impose mandatory liability on contractors and supervising architects for a 10-year period starting from the date of the final delivery, covering defects that threaten the safety or stability of the structure. Article 880(1) of the Civil Transactions Law in the United Arab Emirates, for instance, imposes joint and several liability on contractors and supervising architects for 10 years starting from the date of final delivery, covering both ‘total or partial collapse of the structure’ and ‘any defect that threatens the building’s stability or safety’. The contractors can be liable even if the collapse is caused by ground conditions or if the employer approved the defective design or construction. Article 882 expressly states that ‘any agreement tending to exclude or limit the decennial liability of the engineer and the contractor shall be void’.[13]
Decennial liability comes from the French Civil Code, which has served as a model for many civil law jurisdictions in the Gulf Cooperation Council (GCC) countries; however, whereas Article 1792 of the French Civil Code imposes decennial liability broadly on architects, contractors, technicians or other persons who perform the works, many of the GCC countries only impose decennial liability on the builder and architects. This can create issues and secondary disputes between main contractors and subcontractors if there is no clear indemnity or back-to-back warranty in relevant subcontracts.[14] Compulsory insurance for decennial liability is also not required in many GCC countries.
Defect liabilities can be significant, requiring, in some cases, remobilisation of significant manpower and equipment and reinstatement of the works. In practice, and while it is common for the parties to negotiate comprehensive defect liability regimes with strict temporal limitations, the enforcement of such limitations can be problematic in certain jurisdictions. For contractors, the best protection is to obtain insurance for these risks, where available, or to ensure that it has recourse against any relevant subcontractor or vendors in the event a dispute arises.
Contributory negligence
A recurring mandatory law issue is the interaction of contract law with the rights and obligations of the parties under the background law – in particular, parallel duties under tort law. A related issue that comes up frequently in construction disputes is contributory negligence.
Contributory negligence is a defence that applies where a claimant’s negligent conduct has contributed to its own losses. It differs from the topics discussed previously in that it operates as a defence and is rarely addressed expressly in construction contracts.
Under English law, Section 1(1) of the Law Reform (Contributory Negligence) Act 1945 provides that if a claimant suffers damages partly owing to its own fault and partly owing to the defendant’s fault, the damages recoverable shall be reduced to the extent the court deems just and equitable. Section 4 defines ‘fault’ broadly to include negligence, breach of statutory duty or other acts or omissions that would give rise to tort liability. Under English law, contributory negligence can be raised as a defence to claims in tort and to contractual claims, provided there is a concurrent duty in tort.[15]
Duties in contract and tort are not co-extensive under English law, particularly with respect to pure economic loss. The extent to which there is a concurrent duty in tort for economic losses under construction contracts governed by English law depends on several factors, including the nature of the contract, the relationship between the parties, and the relevant contractual terms.
In the 2011 case of Robinson v. PE Jones, the Court of Appeal held that concurrent duties in tort for pure economic loss arising from defective work or materials would not ordinarily arise in the context of a construction contract. The Court found that tortious liability for defects requires the kind of responsibility typically found in professional relationships – such as those with architects or engineers – where the contractor has assumed responsibility for economic losses under the principles established in Hedley Byrne v. Heller.[16]
Contrary to the common law position, civil law countries tend to allow the contributory negligence defence more readily, even in contractual claims. For instance, German law codifies contributory negligence in Section 254 of the Civil Code (BGB). Section 254(1) of the BGB provides that if the person suffering damage contributed to the damage by their own fault, then the obligation to compensate, as well as the extent of compensation, depends on the circumstances, especially on the degree to which each party caused the damage. A court must reduce the plaintiff’s damages in proportion to their contributory fault. Section 254(2) further specifies that this rule also covers the claimant’s post-incident failure to mitigate damages.
Similarly, Korean law codifies contributory negligence in Article 396 of the Korean Civil Code (KCC).[17] Article 396 of the KCC stipulates that if the obligee is at fault in relation to the non-performance, the court must take this into account in determining the liability for damages and the amount thereof. The KCC frames the provision so that the court has a duty to consider contributory negligence even when a party does not rely on such defence. If the court does not consider contributory negligence, its judgment may be appealed.
Contributory negligence defences are most common in construction disputes in the context of defect claims where one party’s losses have been aggravated or caused in part by their own fault; however, the defence is not limited to this situation and can also arise in disputes stemming from delays, cost overruns, site access, reliance on information and similar matters.
Impediments and impossibility
It is common for international construction projects to be impacted by unexpected events that inhibit the progress of the works. Construction contracts typically contain detailed clauses setting out the circumstances where performance is excused by force majeure and procedures for regulating extension of time claims. Wars, pandemics, natural disasters, extreme weather, general strikes and labour actions, embargoes, sanctions, macroeconomic shocks are but a few examples of unforeseeable events that the parties may designate as excusing performance for a certain period.
In English common law contracts, force majeure clauses are essential to delineate the scope of responsibility in case of such unforeseen events; without a contractual mechanism to claim for extension of time for force majeure, performance would not be excused. This is in contrast with civil law jurisdictions, where force majeure is a legal doctrine and part of the background law.[18]
Best practice is to define force majeure carefully in international construction projects; parties will typically develop a detailed list of events that will entitle the contractor (and, in some cases, the owner) to an extension of time.
While in most jurisdictions the parties may define what constitutes a force majeure event, mandatory law may override the agreement between the parties in some cases. In response to the covid-19 pandemic, for instance, some jurisdictions enacted laws granting contractors an extension of time entitlement for construction projects in the jurisdiction.
If the impediment to works is because of the acts or omissions of the owner, mandatory principles of good faith and fair dealing in civil law jurisdictions may provide relief to the contractor whose performance has been impacted. Under English law, there is a very strong presumption that, unless clear words are used, the parties did not intend the contractor to bear the risk for an act of prevention by the employer. If the parties do not stipulate that the contractor is entitled to an extension of time for an act of prevention by the owner, there is no implied term permitting an extension of time, and the application of the common law prevention principle would mean that, on the happening of such event, time was set at large and the contractor would be entitled to a reasonable time to complete the works.
However, the prevention principle is not an overriding rule of public policy, and the parties, in principle, may agree that the contractor will bear the risk of delays attributable to acts or defaults of the employer.[19]
English law is similarly stringent with respect to the circumstances in which the obligations of the parties will be discharged by frustration. Mere hardship, commercial impracticality or increased cost are generally not sufficient to establish frustration; the event must make performance legally or physically impossible or render it fundamentally different from what was originally contemplated.
A classic example involving construction is Davis Contractors v. Fareham Urban District Council, where a contractor claimed frustration owing to serious delays and cost overruns caused by post-contract shortages in labour and materials.[20] Although performance became significantly more onerous, the House of Lords rejected the contractor’s claim, holding that frustration does not arise simply because a contract has become more difficult or expensive to perform. The court emphasised that frustration turns not on implied terms, but on whether the supervening event, viewed in context, rendered the obligation fundamentally different. As Lord Reid observed, ‘frustration depends, at least in most cases, not on adding any implied term but on the true construction of the terms’.[21]
Because of the doctrine’s limited scope and rigid application, many commercial parties include an express force majeure clause in their contracts to make room for negotiating extensions, suspensions or other remedies, rather than facing the binary consequence of automatic termination under frustration.
In civil law jurisdictions, frustration is primarily addressed through the doctrines of force majeure and hardship, which allow for contract termination and modification. There are important differences in how these doctrines operate between civil law jurisdictions.
In Korea, there is no statutory definition of force majeure, but the concept has been fleshed out through court precedents. Korean courts apply criteria of externality, foreseeability and irresistibility similar to other civil law jurisdictions and have recognised force majeure in exceptional cases such as natural disasters, war or government restrictions;[22] however, the absence of a codified rule means that parties must rely on judicial interpretation and a highly fact-sensitive inquiry. Consequently, best practice is for the parties to consider carefully the application of force majeure principles and the circumstances in which they will be relieved from their obligations as a result of unforeseen events.
Liquidated damages
Mandatory laws also impact the enforceability of liquidated damages clauses in some jurisdictions. In common law jurisdictions, liquidated damages clauses are generally enforceable provided they do not violate the rule against penalties.
The classic test from Dunlop v. New Garage is whether the stipulated sum was a genuine pre-estimate of loss at the time of contracting.[23] This standard was somewhat intrusive and uncertain and was revised a century later in the Cavendish v. Talal case, where the UK Supreme Court held that the penalty rule would apply to a secondary obligation only if the damages payable were ‘out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation’.[24] The shift narrowed the application of the penalty rule and moved the focus from loss estimation to proportionality and commercial justification, aligning the test more closely with contracting reality.
By contrast, in many civil law jurisdictions, liquidated damages clauses are presumptively valid, but the courts have the power to modify the liquidated damages in certain situations. For instance, Korean law adopts a dual-track framework that explicitly distinguishes between liquidated damages and penalties. Liquidated damages provisions are considered compensatory and are governed by Article 398 of the KCC.[25] These clauses are presumptively valid, but the court has the discretion to reduce the amount of liquidated damages if it finds the amount to be ‘unduly excessive’. Such liquidated damages clauses operate as a cap and a pre-agreed estimate of loss, serving as an exclusive remedy in lieu of general damages at law.[26]
Korean construction contracts often calculate delay damages using a fixed daily rate based on a percentage of the total contract value; however, even if the rate is commercially reasonable, the Korean Supreme Court has emphasised that the cumulative liability must also be proportionate. The courts will consider both the rate and the cumulative effect of the delay in determining whether the damages are proportionate.[27]
Similar issues arise in other civil law jurisdictions and, while liquidated damages clauses are presumptively valid, the amount of damages that may be recovered in a dispute may be more uncertain. For parties engaged in cross-border construction projects, a clear understanding of these jurisdiction-specific issues is essential to ensure that liquidated damages clauses can be enforced and the amount recoverable is more certain.
Statutory adjudication
Statutory adjudication frameworks in the United Kingdom, Singapore and Australia represent a fundamental shift in construction dispute resolution by prioritising cash flow and timely resolution over traditional contractual autonomy. These regimes impose mandatory adjudication rights that cannot be excluded by private agreements, ensuring that parties retain access to a fast-track process regardless of contractual terms.
In jurisdictions with statutory adjudication regimes, construction industry participants such as contractors, subcontractors, consultants and suppliers are granted a statutory right to submit progress payment claims. Upon receipt of such claims, the paying party is obliged to either respond or pay within the time frames prescribed by the contract or, where applicable, by the governing statute.
When disputes arise, the claimant may initiate a fast-track adjudication process, which typically takes around seven to 10 days from the date the respondent’s answer to the adjudication application is received. This process is designed to be efficient, cost-effective and accessible. Adjudication decisions are typically binding on an interim basis; they must be complied with unless and until they are overturned or modified by a court or arbitral tribunal.
While procedural details vary between jurisdictions, the adjudication process commonly involves the submission of a written application by the claimant, the appointment of an independent adjudicator and an exchange of written submissions. The adjudicator may conduct inspections or request further information as needed. A written determination is then issued, setting out the amount, if any, to be paid.
The payment procedures, the right to adjudication and entitlements to interim payments are typically mandatory and frequently exist alongside detailed contractual procedures for payment claims and disputes. Temporal and other procedural limitations on claims may also be overridden by applicable laws. For instance, under the Housing Grants, Construction and Regeneration Act 1996 in the United Kingdom, parties to a construction contract may refer a dispute to adjudication ‘at any time’.[28]
In R G Carter v. Edmund Nuttall, the court invalidated a clause requiring mediation prior to adjudication, finding it contrary to the Section 108 right to adjudicate at any time.[29] Similarly, in Yuanda (UK) v. WW Gear Construction, a contractual clause requiring the referring party to pay both parties’ legal costs in adjudication was held unenforceable.[30]
Adjudication laws frequently prohibit ‘pay when paid’ clauses and similar conditional payment obligations. They may also prevent deductions and claims for set-off in certain situations. The Building and Construction Industry Security of Payment Act in Singapore, for instance, restricts employers from setting off claims for damage, loss or expense against payment claims, although an exception is made concerning claims for liquidated damages supported by either a document showing mutual agreement between the parties on the quantum, or a certificate or other contractual document required under the contract.
Conclusion
Party autonomy is a central tenet of contract disputes in international construction projects, but the principle is not unqualified or absolute. There are many important limitations, including many recurring issues in construction disputes. It is essential for parties to verify any relevant constraints at the contracting stage and to conduct themselves throughout negotiations and the performance of the contract in a way that minimises risk to the extent possible. In certain cases, mandatory law may impose significant liabilities on the parties. For legal practitioners, identifying and accounting for such risks is essential.
Endnotes
[1] For instance, under English law, no reliance clauses that have the effect of excluding liability for misrepresentation must satisfy the test for reasonableness under Section 11(1) of the Unfair Contract Terms Act 1977. First Tower Trustees Ltd & Anor v. CDS (Superstores International) Ltd [2018] EWCA Civ 1396 at [67].
[2] In civil law systems, fraud vitiates the consent of the parties and renders the contract a nullity if challenged by the innocent party. See, e.g., Article 1130 of the French Civil Code. Similar principles apply across many civil law systems, where codified doctrines protect the integrity of consent and prohibit contractual waivers of liability for intentional deceit.
[3] See, e.g., Misrepresentation Act 1967, Sections 2(1) and 3(1).
[4] The Australian High Court has emphasised that a party’s intention is irrelevant; the focus is on whether the conduct is objectively misleading or deceptive, especially putting into consideration towards whom the conduct was directed. Campbell v. Backoffice Investments Pty Ltd [2009] HCA 25 at [25]–[26].
[5] See Miller & Associates Insurance Broking Pty Ltd v. BMW Australia Finance Ltd [2010] HCA 31 at [14], interpreting Section 4(2) of the Trade Practices Act 1974.
[6] Demagogue Pty Ltd v. Ramensky [1992] 39 FCR 31 at [32], [70].
[7] Brighton Australia Pty Ltd v. Multiplex Constructions Pty Ltd [2018] VSC 246 at [113].
[8] Article 1231-3 of the French Civil Code, for instance, provides that a debtor is liable only for damages that were foreseen or could have been foreseen when the contract was concluded, unless non-performance is because of gross negligence (faute lourde) or wilful deceitful conduct (faute dolosive).
[9] Korean Supreme Court Judgment No. 2000Da62254, 28 June 2002.
[10] Korean Civil Code (KCC), Article 672 (Special agreement on exemption from warranty liability).
[11] Pearce & High Ltd v. Baxter & Anor [1999] EWCA Civ 789 at [25].
[12] Sandy Island Pte Ltd v. Thio Keng Thay [2020] SGCA 86 at [80].
[13] Similar decennial liability regimes can be found throughout the region: see, e.g., Egyptian Civil Code, Article 651; Qatar Civil Code, Article 711; Implementing Regulations of the Saudi Building Code Application Law; Article 19(1).
[14] Aymen Masadeh, ‘Decennial Liability in Construction: Law and Practice in the United Arab Emirates’, in Proceedings of the International Conference on Construction in a Changing World (2014), p. 6.
[15] Forsikringsaktieselskapet Vesta v. Butcher [1986] 2 All ER 488 at [507].
[16] See, e.g., Robinson v. PE Jones (Contractors) Ltd [2010] EWHC 102 (TCC) at [76], which considers the Hedley Byrne principle.
[17] KCC, Article 396 (Contributory negligence).
[18] For example, in France, Article 1218 of the Civil Code codifies force majeure as an event that is beyond the debtor’s control, unforeseeable at the time of contract formation and unavoidable despite reasonable efforts. If the impediment is temporary, performance is suspended; if permanent, the contract is automatically terminated.
[19] North Midland Building Ltd v. Cyden Homes Ltd [2018] EWCA Civ 1744 at [30].
[20] Davis Contractors Ltd v. Fareham Urban District Council [1956] UKHL 3.
[21] ibid.
[22] See, e.g., Korean Supreme Court Judgement No. 2008Da15940, 10 July 2008; Korean Supreme Court Judgement No. 2001Da48057, 23 October 2003; Korean Supreme Court Judgement No. 2001Da1386, 4 September 2002; Daejeon District Court Judgement No. 2004GaHap3493, 19 April 2006.
[23] Dunlop Pneumatic Tyre Co Ltd v. New Garage & Motor Co Ltd [1915] AC 79 at [6].
[24] Cavendish Square Holding BV v. Talal El Makdessi; ParkingEye Ltd v. Beavis [2015] UKSC 67 at [32].
[25] KCC, Article 398 (Liquidated damages).
[26] Penalty clauses under Korean law are also not per se invalid, unlike in common law jurisdictions. Instead, courts may strike them down if they violate public policy under Article 103 of the KCC (e.g., if the penalty is grossly disproportionate or imposed in bad faith).
[27] Korean Supreme Court Judgement No. 95Da45779, 4 September 1995.
[28] Housing Grants, Construction and Regeneration Act 1996, Section 108(5).
[29] R. G. Carter Ltd v. Edmund Nuttall Ltd [2000] Adj.L.R. 06/21 at [30].
[30] Yuanda (UK) Co Ltd v. WW Gear Construction Ltd [2010] EWHC 720 (TCC) at [54].
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